Sound Energy PLC (LON:SOU)

Sound Energy PLC (LON:SOU)


Share Price
8.08 p
Change
-0.45 (-5.28 %)
Market Cap
£87.23 m
Proactive Investors - Run By Investors For Investors

Sound Energy PLC RNS Release

Tendrara Gas Sales Agreement Update


RNS Number : 6492X
Sound Energy PLC
01 May 2019
 

1 May 2019

 

Sound Energy plc

("Sound Energy" or the "Company")

 

Tendrara Gas Sales Agreement Update

 

Sound Energy ("the Company"), the Moroccan focused upstream gas company, provides an update on its negotiations of a Gas Sales Agreement ("GSA") for the Company's gas resources in the Tendrara production concession in Eastern Morocco.

 

The Company announces that it continues to negotiate the terms of a GSA and confirms that, as part of those ongoing negotiations, it has received a letter setting out a non-binding offer ("the Offer") from the Ministry of Energy and Mines for the Kingdom of Morocco.

 

The Offer envisages that all gas produced by the existing Tendrara production concession will be sold under a GSA to Morocco's Office National de l'Electricité et de l'Eau Potable ("ONEE"), the state power company in Morocco.  

 

Under the Offer, the sales price of the gas from 2022 is proposed to be structured with both a variable element* linked to the Brent oil price and a fixed element paid to the Company to fully cover the transportation cost of the gas in the planned Tendrara Gas Export Pipeline. These fixed transportation costs are expected to be capped at some $12.2 million per year under the terms of the Build Own Operate Transfer proposal under negotiation with a consortium led by Enagas of Spain.

 

The Offer would result post end 2021, based on current oil prices of around $70 to $75 per barrel Brent, in a total gas sales price (variable plus fixed) of some $8.50 to $9.00 per million British Thermal Unit ("mmBTU"), assuming a $1/mmBTU pipeline fee**.

 

Prior to end 2021, ONEE proposes to purchase any gas at the price at which the Moroccan state sells gas to ONEE.

 

Sound will now continue to negotiate the Offer with a view to closing out a binding Heads document. The GSA is an important milestone in the progression of the TE-5 field to commercial production.

 

* The variable element of the Offer is structured as below, onto which the fixed transportation costs capped at $12.2 million per annum will be added.

 

Prevailing Brent Crude

oil price per barrel ("B")

 

Offer price

per mmBTU ("P")

B < US$50/bbl

P = 0.04 x B + US$3.5

 

US$50/bbl < B < US$100/bbl

 

P = 0.10 x B + US$0.5

 

B > US$100/bbl

P = 0.04 x B + US$6.5

 

 

** based on an illustrative downside case production rate of 29 mmscf/d.

 

For further information please contact:

 

Vigo Communications - PR Adviser

Patrick d'Ancona

Chris McMahon 

 

Tel: 44 (0)20 7390 0230

Sound Energy

James Parsons, Chief Executive Officer 

JJ Traynor, Chief Financial Officer

[email protected]

 

 

 

Cenkos Securities - Nominated Adviser

Azhic Basirov

David Jones

Ben Jeynes 

 

Tel: 44 (0)20 7397 8900

RBC - Joint Broker

Matthew Coakes

Martin Copeland

 

Tel: 44 (0)20 7653 4000

Macquarie Capital (Europe) Limited - Joint Broker

Alex Reynolds

Nick Stamp

Tel: 44 (0)20  3031 2000

 

 

 

Bbl means barrel; mmBTU means million British Thermal Units; and mmscf/d means million standard cubic feet of gas per day.

 

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
AGRURUBRKRASOAR

Sound Energy PLC Timeline

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use